A complete guide to car leasing

  • What is leasing? We explain in detail
  • Advantages and disadvantages explored
  • Our guide to getting a good lease deal

Do you want to drive a new car, but don’t have thousands of pounds in the bank? Could you afford a monthly payment, but not an expensive loan? Leasing could be your gateway to a brand-new car now, and for less than you think.

You may have been offered a lease deal by a garage, or you may be in the market for a new car and need to explore different finance options. Either way, Parkers is here to help.

By the end of this article you will have everything you need to know to decide whether it is right for you plus the best ways to go about getting a good deal.

Get a good deal

What is leasing?

Your car is likely to be the second largest purchase you make after your home, and the ways you can part with your cash are comparable – you can buy outright, take out a loan, or pay monthly rent.

Leasing a vehicle is similar to renting a property. You pay a deposit and a fixed monthly cost for an agreed length of time. At the end of the deal you simply hand the keys back, having enjoyed years of (hopefully) worry free motoring.

However, the deposit is non-refundable and you are tied into a contract which could last up to five years, so it requires careful thought.

What are the advantages of leasing?

One of the main reasons people choose to lease is to enjoy all the benefits of a new car – greater safety, lower running costs, and reliability - without having to raid their savings or take out a loan.

Lower monthly costs means you can drive that luxury saloon or sporty hatchback of your dreams - a vehicle you may not have been able to afford otherwise.

Leasing a car

Paying a set amount per month for your car makes it easy to manage your money. Car tax, maintenance and servicing are usually included too, making car-ownership transparent and virtually stress-free.

It’s true that you could enjoy some of these advantages with a finance deal - but the deposit and monthly costs of a lease are usually lower.

When you come to the end of your lease, you don’t have to worry about selling your old vehicle, just hand the keys back and either start a new lease or choose an alternative way to fund your next car.

It’s not all good news – the disadvantages of leasing

Leasing isn’t always the best option and it certainly isn’t for everybody.

Just like renting a home, you will pay hundreds of pounds a month to the lease company, and at the end of the deal you will have nothing to show for it – the vehicle does not belong to you.

Because of this, the lease company can control how you use the car. This can include mileage restrictions and insisting the condition of the vehicle hits a certain standard when you give it back. Any breach of these rules will be met by a financial penalty.

Being tied into a contract is one of the biggest disadvantages, because although you may be able to afford the monthly costs now, life can change very quickly, and you may find the monthly repayments more of a struggle further down the line.

Likewise, an annual limit of 10,000 miles may be sufficient when you sign on the dotted line, but factors like a house move, new job or new family members could soon see you running out of allowance.

Buying a car

How to get a good deal

• Decide on what type of a car you want based on your needs now and what you will require throughout the life of the lease. Think ahead – you might not need a big boot now, but what about in three years’ time?

• Make a list of which models you can afford, and be strict – an extra £50 a month might not seem a lot, but on a three-year lease this adds up to £1,800.

• Study the terms and conditions of each lease to make sure it works for you. Beware of very cheap monthly costs – they could require a large deposit or offer you low annual mileage. Keep an eye out for extra charges that you may struggle to pay, and whether things like servicing and maintenance are included.

• Take each car for a spin to help you decide which you prefer – but read our guide to test-driving first.

• Shop Around – here at Parkers we’ve done the homework for you by collecting together some of the best deals in one place. Browse the Parkers leasing section today for the latest deals.

• Once you’ve decided which car and lease you want – haggle to get a good deal. Our guide to haggling will tell you everything you need to know.

• Finally, don’t be afraid to walk away from a deal if it isn’t right for you – there is no need to settle on something that doesn’t fit your requirements.